This study was initiated to assess the role of endogenous interferon on monocyte/macrophage differentiation and activation for host defense functions. Initial observations indicated that bacterial lipopolysaccharide (LPS), a potent monocyte/macrophage activating stimulus, failed to elicit interferon (IFN) production by freshly isolated human monocytes, despite the fact that other monocyte-derived cytokines (tumor necrosis factor, TNF; interleukin-1, IL-1) are produced upon LPS stimulation. However, culture of monocytes in the presence of either interferon-gamma (IFN-gamma) or granulocyte-macrophage colony stimulating factor (GM-CSF) induces the capacity for LPS induction of IFN. TNF and IL-1 are differentially regulated under these conditions, suggesting independent regulation of all of these LPS-induced monokines. Neutralization studies indicate that the IFN produced in response to LPS is primarily of the alpha subtype. Northern analysis, using an IFN-alpha2 cDNA probe, demonstrated that induction by LPS is regulated at the steady-state mRNA level. Further studies have shown that interferon gene expression is quite transient. Down-regulation of expression occurs quickly following induction and is temporally related to the latent induction of the mRNA for interferon regulatory factor 2 (IRF-2), a nuclear factor thought to be involved in repression of IFN gene transcription. A role for NF-kappaB has not been ruled out, although IFN-alpha promoters lack the binding site for this factor.